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ADM (ADM) Down 1.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Archer Daniels Midland (ADM - Free Report) . Shares have lost about 1.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ADM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Archer Daniels’ Q2 Earnings & Revenues Miss, Down Y/Y
Archer Daniels posted second-quarter 2024 results, wherein the bottom and top lines missed the Zacks Consensus Estimate. Both metrics declined year over year.
Adjusted earnings of $1.03 per share missed the Zacks Consensus Estimate of $1.23. Also, the figure declined 46% from earnings of $1.89 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were 98 cents per share, down 42.4% from the year-ago quarter’s $1.70.
Revenues fell 9.5% year over year to $22.2 billion and lagged the consensus estimate of $23.2 billion.
Segment-wise, revenues for Ag Services & Oilseeds fell 12.6% year over year to $17.3 billion and Carbohydrate Solutions’ revenues dropped 14.7% year over year to $2.9 billion. However, Nutrition witnessed year-over-year revenue growth of 3.2% to $1.9 billion.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline 6.9% and 11.1%, respectively. We estimated Nutrition revenues to rise 0.7%.
The gross profit decreased 26.3% year over year to $1.4 billion but exceeded our estimate of $1.3 billion. Meanwhile, the gross margin fell 120 basis points to 6.3%. The metric fared better than our estimate of 5.7%. SG&A expenses rose 8.3% year over year to $0.9 billion. We expected SG&A expenses to increase 5%.
Archer Daniels reported an adjusted segmental operating profit of $1 billion, down 37% from the year-ago quarter.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 56% year over year to $459 million. In South America Origination, weak farmer selling owing to a smaller crop in Mato Grosso, and increased logistics costs associated with industry take-or-pay contracts contributed to lower margins. North American Origination results were soft as higher supply from Brazil and Argentina shifted export competitiveness to South American origins, coupled with fewer carriers and trading opportunities in North America.
In the Crushing subsegment, global soybean crush margins fell, driven by more balanced supply and demand conditions and reduced soybean oil values due to increased imports of used cooking oil. There were negative mark-to-market timing impacts of nearly $15 million compared to $195 million of adverse impacts a year ago. Refined Products & Other results were also dull, as refining margins eased from the prior levels owing to the increased pre-treatment capacity and higher imports of used cooking oil. Biodiesel margins were soft year over year, thanks to lower LCFS and RIN values. Equity earnings from Wilmar were $68 million in the second quarter.
The Carbohydrate Solutions segment’s adjusted operating profit increased 12% year over year to $357 million. The Starches and Sweeteners sub-segment rose $22 million as robust starches and sweeteners margins coupled with increased volumes were offset by reduced domestic ethanol margins and soft margins in the EMEA region. In the Vantage Corn Processing subsegment, results rose $16 million on solid demand for exports of ethanol supported higher margins.
In the Nutrition segment, the adjusted operating profit of $109 million plunged 36% from $169 million in the year-ago quarter. The Human Nutrition subsegment’s operating profit was $103 million, roughly $82 million lower from the prior-year period, stemming from the impacts related to the unplanned downtime at Decatur East, a normalizing texturants market and increased manufacturing costs hurting margins. In the Animal Nutrition subsegment, the operating profit of $6 million increased year over year as cost optimization efforts and lower input costs aided margins.
Other Financials
The company ended the quarter with cash and cash equivalents of $764 million; long-term debt, including current maturities, of $8.2 billion; and shareholders’ equity of $22.2 billion. As of Jun 30, 2024, ADM provided $700 million in cash for operating activities. It repurchased shares worth $1.3 billion and cash dividends of $257 million.
Management reaffirmed its earlier earnings per share (EPS) guidance for the full year. It still envisions adjusted EPS in the band of $5.25-$6.25.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, ADM has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ADM has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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ADM (ADM) Down 1.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Archer Daniels Midland (ADM - Free Report) . Shares have lost about 1.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ADM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Archer Daniels’ Q2 Earnings & Revenues Miss, Down Y/Y
Archer Daniels posted second-quarter 2024 results, wherein the bottom and top lines missed the Zacks Consensus Estimate. Both metrics declined year over year.
Adjusted earnings of $1.03 per share missed the Zacks Consensus Estimate of $1.23. Also, the figure declined 46% from earnings of $1.89 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were 98 cents per share, down 42.4% from the year-ago quarter’s $1.70.
Revenues fell 9.5% year over year to $22.2 billion and lagged the consensus estimate of $23.2 billion.
Segment-wise, revenues for Ag Services & Oilseeds fell 12.6% year over year to $17.3 billion and Carbohydrate Solutions’ revenues dropped 14.7% year over year to $2.9 billion. However, Nutrition witnessed year-over-year revenue growth of 3.2% to $1.9 billion.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline 6.9% and 11.1%, respectively. We estimated Nutrition revenues to rise 0.7%.
The gross profit decreased 26.3% year over year to $1.4 billion but exceeded our estimate of $1.3 billion. Meanwhile, the gross margin fell 120 basis points to 6.3%. The metric fared better than our estimate of 5.7%. SG&A expenses rose 8.3% year over year to $0.9 billion. We expected SG&A expenses to increase 5%.
Archer Daniels reported an adjusted segmental operating profit of $1 billion, down 37% from the year-ago quarter.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 56% year over year to $459 million. In South America Origination, weak farmer selling owing to a smaller crop in Mato Grosso, and increased logistics costs associated with industry take-or-pay contracts contributed to lower margins. North American Origination results were soft as higher supply from Brazil and Argentina shifted export competitiveness to South American origins, coupled with fewer carriers and trading opportunities in North America.
In the Crushing subsegment, global soybean crush margins fell, driven by more balanced supply and demand conditions and reduced soybean oil values due to increased imports of used cooking oil. There were negative mark-to-market timing impacts of nearly $15 million compared to $195 million of adverse impacts a year ago. Refined Products & Other results were also dull, as refining margins eased from the prior levels owing to the increased pre-treatment capacity and higher imports of used cooking oil. Biodiesel margins were soft year over year, thanks to lower LCFS and RIN values. Equity earnings from Wilmar were $68 million in the second quarter.
The Carbohydrate Solutions segment’s adjusted operating profit increased 12% year over year to $357 million. The Starches and Sweeteners sub-segment rose $22 million as robust starches and sweeteners margins coupled with increased volumes were offset by reduced domestic ethanol margins and soft margins in the EMEA region. In the Vantage Corn Processing subsegment, results rose $16 million on solid demand for exports of ethanol supported higher margins.
In the Nutrition segment, the adjusted operating profit of $109 million plunged 36% from $169 million in the year-ago quarter. The Human Nutrition subsegment’s operating profit was $103 million, roughly $82 million lower from the prior-year period, stemming from the impacts related to the unplanned downtime at Decatur East, a normalizing texturants market and increased manufacturing costs hurting margins. In the Animal Nutrition subsegment, the operating profit of $6 million increased year over year as cost optimization efforts and lower input costs aided margins.
Other Financials
The company ended the quarter with cash and cash equivalents of $764 million; long-term debt, including current maturities, of $8.2 billion; and shareholders’ equity of $22.2 billion. As of Jun 30, 2024, ADM provided $700 million in cash for operating activities. It repurchased shares worth $1.3 billion and cash dividends of $257 million.
Management reaffirmed its earlier earnings per share (EPS) guidance for the full year. It still envisions adjusted EPS in the band of $5.25-$6.25.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, ADM has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ADM has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.